There are several elements of inverted curves before recession happened in the past, and they are still missing today:
1) The inversion is by larger amount like 40 base points
2) The inversion is for extended period of time. Last time it lasted a few years (2006 and 2007).
3) Overall credit condition is tight. Previously we had 6.5% (2000) or 5.25% (2006) fed fund rate, very tight condition. The current 2.4% fed fund rate and other short to medium rates are just a little above inflation, actually quite neutral.
The drop in 10 yield bond rate actually behaves like an automatic stabilizer and helps the economy and market. It also makes stock less expensive, S&P 500 has dividend yield of 2% with earning growth compared to 10 year treasury at 2.44%.
As for housing the 1991-1996 downturn was a result of recession, but only dropped 10% in 5 year time frame. There were massive layoff in San Diego, General Dynamics shut down locally, 40K people in GD alone lost jobs. Other defense contractors across Southern Cal reduced head count aggressively.
